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Swedish IT Outsourcing Intelligence Report 2011

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This Intelligence Report is based on a February - March 2011 survey of the 479 Swedish companies that either outsource their Software Development (SD) / Information Technology (IT) function(s) to …

This Intelligence Report is based on a February - March 2011 survey of the 479 Swedish companies that either outsource their Software Development (SD) / Information Technology (IT) function(s) to external providers onshore, offshore and/or nearshore, or develop their software/IT solutions within own house.

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  • 1. IT Sourcing EuropeEuropean IT OutsourcingIntelligence Report 2011:Sweden March 2011
  • 2. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenContents Executive Summary _________________________________________________________ 3 Respondent Profiles_________________________________________________________ 5 Outsourcing Behaviors_______________________________________________________ 7 Outsourcing Drivers & Factors_________________________________________________ 10 Outsourcing Challenges & Solutions_____________________________________________12 Client – Vendor Relationships__________________________________________________13 Outsourcing Costs___________________________________________________________ 15 Impressions of Outsourcing____________________________________________________ 16 Future Outsourcing Plans______________________________________________________ 17 In-House Software Development Trends & Challenges_______________________________ 18 Key Findings’ Highlights________________________________________________________24 Conclusions__________________________________________________________________27 2|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 3. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenExecutive Summary This Intelligence Report is based on a February - March 2011 survey of the 479 Swedish companies that either outsource their Software Development (SD) / Information Technology (IT) function(s) or develop their software/IT solutions within own house. The Report aims to help Swedish outsourcing companies: Get an in-depth understanding of the current Swedish IT Outsourcing (ITO) demands and trends See what challenges are facing their market peers and how they respond to them Revise / improve their current ITO engagements / business models based on the industry best practices The Report aims to help Swedish non-outsourcing companies: Better understand modern SD/IT costs optimization and/or reduction strategies See what challenges are facing the in-house software development and how their market peers / competitors respond to them Evaluate own readiness to adopt the outsourced / distributed development Find out what their market peers think about SD/ITO and how they are / will be preparing for adoption of the outsourced development in the future Survey Overview The Swedish ITO survey 2011 was conducted between February 21 and March 14, 2011, in the frames of the All-European ITO research. Survey goals: Explore factors that drive Swedish companies to outsource their SD/IT functions in 2011 Explore challenges associated with offshore/nearshore outsourcing and the most effective problem solving strategies Explore the use of different business models in ITO engagements and find out which model works best for different types of companies and industries Explore factors that keep Swedish companies away from outsourcing their SD/IT function(s) Compare and contrast the 2011 and future ITO demands in Sweden The survey was available online and hosted by SurveyMonkey, the world’s leading provider of web-based survey solutions. In order to reach as many Swedish companies as possible, IT Sourcing Europe used its own database of business contacts and sent out a survey invitation letter to each company’s decision makers (C- level executives, IT Managers, Directors, Heads of Software Development etc). Additionally, inbound marketing initiatives were launched in order to attract more companies to participate in the survey. 3|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 4. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden In the frames of this initiative the following steps were taken: Online press releases and survey announcements distribution; Survey localization and optimization in social media such as LinkedIn, XING, Facebook, Mobile Monday Stockholm, blogs ( Twitter, Word Press, IT Sourcing Europe’s Blog), event management systems (Amiando), and B2B web portals (Europages, Hoovers) All data obtained were analyzed in the form of industry aggregates. The answers to open-end questions were organized by their relativity to the study goals and displayed as the option “all other responses” in charts and graphs further in the Report. Outsourcing Activity & Categories Surveyed: The following ‘outsourcing activity’ is referred to in the 2011 Swedish ITO Report: Software Development / Information Technology Outsourcing (SD/ITO) is the process of transferring part of/entire software development function and/or other Internet related work to the execution by the external IT services provider(s) The following categories fall under this activity: Application (app) development and maintenance; Website / ecommerce systems; Data warehousing; IT security; Data / voice network operations; Remote IT infrastructure management These categories further fall under the five key areas of expertise: Web (Web 2.0, .NET, Java, PHP, open source etc); Enterprise 2.0 (J2EE, J2SE, C#, MySQL etc); Mobile development (J2ME etc); Embedded development; Software as a service (SaaS) and Cloud Computing The key takeaways from the survey: In Sweden, companies that do not outsource their SD/IT outnumber those that outsource by 13.2% Most of the Swedish outsourcers have been outsourcing their SD/IT for 37+ months now Most of the Swedish outsourced projects are valued at €0-49K Most of the Swedish outsourcers partner with their ITO service providers via the Dedicated / Own Team Model Web is the most outsourced area of expertise in Sweden, followed by Mobile Computing and Enterprise 2.0 Most of the Swedish companies single-source their solutions Nearshore is the most preferable outsourcing destination in Sweden Top three drivers of ITO decisions in Sweden are: reduction of operating costs, shortage of domestic IT skills and resources and focus on core competence 4|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 5. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenRespondent Profiles Company Size (Headcount) Primary Industry 5|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 6. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Currently Outsourcing? Revenue Growth Expectations in 2011: In-House Developers vs. Outsourcers In-House Developers Outsourcers 6|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 7. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenOutsourcing Behaviors Overall SD/ITO Experience Size Of The Outsourced Team(s) (Headcount) 7|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 8. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Value Of The Outsourced Project(s) (In €) Business Models Used To Partner With ITO Provider(s) 8|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 9. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Multi-Sourcing? Outsourced Areas of Expertise 9|Copyri ght IT Sourcing Eur ope 2011 | All Rights Reserved
  • 10. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Current Outsourcing DestinationsOutsourcing Drivers & Factors Drivers Of Decisions To Outsource SD/IT 10 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 11. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Factors’ Rating In Terms Of Their Importance In The Choice Of The Outsourcing Destination Factors’ Rating In Terms Of Their Importance In The Choice Of The Outsourcing Partner 11 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 12. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenOutsourcing Challenges & Solutions Main Challenges Of The Outsourced Software Development How Companies Respond To The Challenges 12 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 13. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenClient – Vendor Relationships Size Of ITO Service Providers Who Selects IT Specialists To Be Involved In The Project? 13 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 14. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Do Companies Know Exact Salaries Of Each Of Their Developers On The Outsourced Teams? Satisfaction With ITO Service Providers 14 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 15. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenOutsourcing Costs How Actual Annual Incurred Costs Of SD/ITO Compare To The Expected (Contracted) Costs Actual Savings From The Outsourced SD/IT 15 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 16. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenImpressions of Outsourcing outsourcing saves operating costs, but inevitably increases management costs outsourcing our software development has been the right decision costs are higher than expected overall, provider’s work is of higher quality compared to in-house capabilities it is important to have the suppliers team working within or close to the same time zone providers have more disciplined methodologies, which can lower costs further in a longer-term perspective it is critical to have backup providers available in case the primary provider is unable to meet deadlines and/or commitments providers are unreliable and not focused on mid- and long-term cooperation overall, provider’s work is of lower quality compared to in-house capabilities we are very dissatisfied with the decision to outsource our software development generally, the outsourced development meets our company’s expectations 16 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 17. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenFuture Outsourcing Plans Do Companies Plan To Continue Outsourcing In the Future? Future Outsourcing Destinations 17 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 18. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenIn-House Software Development Trends & Challenges How Swedish Companies Develop / Manage Their Software Size Of Internal IT Department/Team(s) 18 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 19. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Part Of Corporate Budget That Swedish Companies Spend On IT Level of Satisfaction With The In-House Development / IT 19 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 20. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Key Challenges Of The In-House Software Development How Companies Respond To The Challenges 20 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 21. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Factors Keeping Swedish Companies Away From SD/ITO we want to have 100% managerial control of our software project(s) we are too small and immature to outsource were afraid that outsourcing will eventually cost us more money and ‘headaches’ than in- house development we think that the outsourced development will result in poorer software product quality we do not want to create any shared environments were totally satisfied with our in-house development results we dont want to put our intellectual property at risk we dont get any pressure to cut costs from customers/investors/executive management we had some negative experience with the outsourced development in the past we think that outsourcing is unethical and work should be kept within own house 21 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 22. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden Circumstances In Which Companies Would Consider Outsourcing Their SD/IT In The Future Where Companies Will Outsource If They Make Such a Decision In The Future 22 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 23. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden How Non-Outsourcers Will Rate Destination Selection Criteria If They Decide To Outsource In The Future How Non-Outsourcers Will Rate Provider Selection Criteria If They Decide To Outsource In The Future 23 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 24. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenKey Findings’ Highlights In Sweden, software development / IT outsourcing gradually penetrates into different industries, but is most actively used by IT and software companies, followed by mobile apps development companies and iGambling/betting providers and games studios. In 2011, the Swedish non-outsourcing companies outnumber those that outsource their SD/IT by 13.2%, while in 2010 the non-outsourcers outnumbered the outsourcers by 22.1%. This finding proves the extremely rapid dynamics of outsourcing penetration into IT and/or business operations in Sweden. Regarding the value of the outsourced projects, the following trends are observed in 2011 compared to 2010: the number of the €0-49K projects increased by 34.9%, the number of the €50-199K projects dropped by 23.7%, the number of the €200-499K projects dropped by 3.9% and the number of the €500+K projects dropped by 7.2%. The finding proves 2011 to be the year of smaller ITO contracts in Sweden. In 2010, the vast majority of the Swedish outsourcers (52%) partnered with their ITO service providers via a Dedicated Development Center (DDC) model. In 2011, only 28.9% of the companies use this model, while the vast majority of outsourcers – 34% - use Dedicated/Own Team model to engage with providers. Fixed price projects are outsourced by 31.5% of companies, down 16% from last year. In 2011, the majority of the Swedish companies outsource Web solutions (up 26% from 2010), followed by Enterprise (up 0.5% from 2010), Mobile (up 9% from 2010), SaaS/Cloud Computing solutions (up 13.1% from 2010) and Embedded development (up 6% from 2010). Two percent of the Swedish companies outsource solely their QA and testing function, which is down 3% from 2010. Significant growth of the outsourced mobile development and cloud solutions in 2011 proves the rapid dynamics of outsourcing penetration into the most innovative areas of expertise that require very fast time to market, access to the global resources and the ability to meet the rapidly changing market / consumer demands. In 2011, the outsourcing destinations of the Swedish companies haven’t changed much, compared to 2010. Most of companies continue to transfer their SD/IT function(s) nearshore – up 3% from 2010. More companies begin to outsource within Sweden (up 5.3% from 2010), while fewer companies go offshore (down 2.5% from 2010). A significant greater number of Swedish companies currently multisource both nearshore and within Sweden (up 7.5% from 2010), while fewer companies outsource offshore and within Sweden (down 3.5% from last year). On the other hand, more companies multisource nearshore, offshore and within Sweden in 2011 – up 6.5% from 2010. The least preferred mix of destinations for the Swedish companies still remains nearshore plus offshore – up 0.5% from 2010. These findings generally hallmark a clear trend that in 2011 more Swedish companies tend to either transfer their development / IT nearshore to be able to have a better face-to-face communication with ITO service providers on a regular basis or distribute development among 2 and/or more providers in different locations to be able to secure the project(s) with back-up providers in case the primary one fails to deliver properly. In 2011, the top three drivers of corporate decisions to outsource IT / SD in Sweden are: 1) reduction of operating costs (up 33.5% from 2010), 2) shortage of domestic IT skills and resources (up 33% from 2010) and 3) necessity to focus on core competences such as product marketing, business development, infrastructure setup/upgrade etc (up 21.3% from 2010). In contrast, the top three outsourcing factors in 2010 were: 1) reduction of operating costs, 2) acceleration of time-to-market and 3) difficulty finding qualified resources within Sweden. 24 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 25. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden When choosing SD/ITO destinations in 2010, the highest rated selection criteria among the Swedish companies were low rates and taxes, an available talent pool and positive references from the peer companies. In 2011, the highest rated criteria are: language skills, an available IT talent pool and political stability. The latter may be explained by the current uprise in social protests and armed rebellions in North Africa and the Middle East that most of the European businesses in general and Swedish businesses in particular are concerned about. The ongoing political restlessness in the above regions has already hit many European investors and, therefore, Swedish companies want to make sure that the hubs where they transfer their SD/IT are politically stable to avoid possible financial and security risks. Regarding the highest rated criteria of the ITO partner selection, in 2010 they were positive references, low service fees and available IT resources. In 2011, the highest rated partner selection criteria are: innovative and flexible business / service delivery model (s), successful pilot project completion, and sound experience in the similar projects. This finding mirrors well the current situation at the global ITO market. Traditional outsourcing models such as fixed price projects, Build-Operate-Transfer (BOT) or Offshore Development Center (ODC) prove to be failing to meet today’s market demand for agility, scalability, fast time-to-market and predictable ITO costs. Therefore, more Swedish companies begin to realize the importance of having as much managerial control of their outsourced projects and resources as possible and use outsourcing as a long-term strategy to improve software/IT products’ quality and respond proactively to pressing customers and rapidly changing market demands rather than just a short-term tactic to reduce costs. Thus, they tend to partner with those ITO service providers who are able to offer engagement via innovative business models such as Client Own/Dedicated Team, Virtual Operating Subsidiary, SCRUM Team and other likewise models allowing transparent pricing and no hidden agenda, access to resources and skills that is not limited to a single geography, extensive knowledge sharing beyond Service Level Agreements and easy / flexible exit terms. In 2010, the key challenges of the outsourced SD/IT were: delayed deliveries and /or missed project milestones, poor project management on vendor’s side and ITO overheads (when actual annual incurred costs far exceeded the contracted ones). In 2011, the Swedish outsourcers continue to face delayed deliveries and hidden agenda, but also point to the poor communication with ITO provider’s project management as a third most critical challenge. This challenge can be linked to / explained by the size of ITO vendors that most of the Swedish outsourcers partner with. Almost 50% of the Swedish companies partner with providers that are less than 50 in headcount, while only 18.1% partner with mid-sized and large providers (500+ in headcount). Many small ITO vendors are startups themselves and, thus, can be missing project management expertise and/or focused on short-term profit generation goals rather than establishing long-term partnerships with the shared risks. Larger providers usually care more about their reputation as reliable, responsible and responsive business partners and, as a result, put more efforts in getting an in-depth understanding of each client’s business needs, have a regular face-to-face communication with clients’ PMs, launch live knowledge sharing events and activities and provide different value-added services to achieve the highest possible client satisfaction rates. To respond to their major challenges in 2011, the Swedish companies increase face-to-face communication with vendor’s project management and development teams (up 39.2% from last year), dedicate more management resources (up 23.5% from last year) and consider partnering with different vendors (up 15.3% from 2010). In contrast, in 2010 the top three responses to outsourcing challenges in Sweden were extension of projects’ deadlines, re-sourcing to different vendors and increase in face-to-face communication. 25 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 26. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden In 2011, more Swedish ITO buyers know exact salaries of each of their developers on the outsourced teams – up 27.8% from 2010. Overall, in 2010 the vast majority of the Swedish ITO buyers were somewhat satisfied with their ITO partners and services provided (40%), while in 2011 the majority of outsourcers are very satisfied with their partners – 31.1%. In 2011, the number of totally dissatisfied ITO buyers is almost the same as in 2010 – 4.4%, which is up 0.4% from the last year’s indicator. Regarding the actual annual incurred versus the contracted costs of ITO, in 2011 more Swedish outsourcers report actual costs to be up to 25% higher than expected (up 21% from 2010), but fewer companies report the actual incurred costs of ITO to be 25-49% higher than expected (down 6% from 2010). Like in 2010, in 2011 most of the Swedish companies report the actual incurred costs to be about the same as the contracted ones – up 8.5% from last year. Regarding the actual savings from the outsourced SD/IT, in 2011 the situation is significantly different, compared to 2010. This year, a prevailing majority of Swedish outsourcers manage to save less than 10% of operating costs from their ITO engagements, which is up 38.5% from 2010 (when only 2% of companies saved less than 10%). On the other hand, more Swedish companies save 10% - 24% of their costs due to ITO, which is up 7% from last year’s figure. Fewer companies save 25% - 39% of corporate IT/SD spending in 2011, which is down 13% from 2010. While in 2010 the vast majority of outsourcers reported saving 40% - 59% of their costs through the outsourced development / IT, the 2011 number dropped by almost 30%. Regarding those that save 60% and more, a decline in their number is also observed in 2011, compared to 2010 – down 3%. This trend can in part be attributed to the fact that many Swedish outsourcers choose to partner with very small ITO service providers who, unlike their mid-sized to large peers, do not have an appropriate access to the qualified IT workforce, do not invest enough in the training and professional advancement of their employees and do not have any well-developed best practice in / long-term strategy for staff retention. Also, since only very few small ITO providers are able to afford to pay competitive salaries (in terms of their home countries’ market rates) to their employees, the risk is high that the clients get insufficient and unqualified personnel involved in their outsourced projects. In addition, some small nearshore ITO vendors practice outsourcing some of their clients’ tasks to even lower-cost offshore destinations due to the lack of domestic resources they have access to / financial inability to outbid competitors’ staff. The mix of such circumstances inevitably leads to the situations when the ITO buyers are overcharged in order to cover new hires / employee replacement in case of vendor’s staff turnover, “secret” re-outsourcing / outtasking practices as well as fixing product’s bugs and errors at the post-release stages due to vendor’s low-qualified resources. These obstacles typically prevent most of Swedish outsourcers from saving more from their ITO engagements. Comparing the overall impressions that the Swedish companies have towards SD/ITO in 2011 versus 2010, significantly more companies say that outsourcing their development / IT has been the right decision - up 16.5%; many more companies believe that provider’s work is of higher quality compared to the in-house capabilities - up 25% from 2010; more companies think it is important to have the provider’s team working within and/or close to the same time zone as Sweden - up 14.7% from 2010. On the other hand, more Swedish outsourcers point out that the actual costs are higher than expected – up 25%, and more companies report a very high level of dissatisfaction with the decisions to outsource – up 6% from last year. 26 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 27. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: Sweden And finally, comparing annual revenue growth expectations of Swedish companies in 2011, the majority of companies that develop IT/SD solutions within own house anticipate 1% to 9% growth (almost 39%), while most of IT/SD outsourcers expect to increase their revenue by 10% to 19%. In addition, 10% of in-house software development companies expect to gain more than 50% revenue growth versus 16% of outsourcers. Conclusions The 2011 Swedish ITO survey demonstrates the rapid dynamics of outsourcing evolution in the country. Outsourcing is gradually becoming a commodity practice that the Swedish companies adopt to reduce operating costs, get access to the qualified IT resources missing within the home country and free in-house staff for business development and other core competences. The positive trends of the Swedish ITO market observed in the course of the research are as follows: • There is a growing demand for the outsourcing services from both ‘traditional’ sectors such as IT and telecom, professional and financial services, construction and hospitality etc and innovative lucrative niches such as mobile computing, digital media and gambling • More Swedish outsourcers realize the importance of engaging with their ITO partners through innovative business models that are able to provide agility, scalability and pricing transparency and predictability • Most of the outsourced projects are small in value and require only 1–3 IT specialists to complete, which generally destroys the myth that outsourcing is for large companies only and is likely to drive more Swedish innovative startups and SMEs to adopt SD/ITO in the near future (today, almost 60% of Swedish companies do not outsource, because they mistakenly think they are yet too small and immature for such an undertaking) • Almost 90% of Swedish outsourcers plan to continue with their outsourced operations in the next 12 to 25+ months, while only slightly more than 10% plan to terminate their ITO contracts in 2011 The negative trends of the Swedish ITO market observed in the course of the research are as follows: • Many Swedish outsourcers still underestimate the importance of careful and proactive planning of their SD/ITO strategies and, as a result, are focused on immediate short-term savings instead of establishing long-term “win-win” relationships with their ITO service providers. Such attitudes and insufficient outsourcing strategy planning often result in the failed outsourced projects, increased dissatisfaction and back-sourcing, which could have been avoided if the right steps had been taken at the pre-engagement and vendor selection stages • Many companies prefer to outsource within Sweden. Considering the fact that the scarce local IT resource pool is the second and high cost of domestic IT resources is the third most frequently cited challenges of the in-house SD/IT in Sweden, it makes sense to assume that the on-shore ITO service providers outtask their clients’ projects near- or offshore and, thus, surcharge ITO buyers to be able to make a profit. Using the proper business models, Swedish on-shore outsourcers would be able to extend own IT teams to lower-cost locations without paying any overheads and intermediary fees. Overall, the Swedish ITO landscape looks more mature in 2011, compared to 2010. 27 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d
  • 28. European ITO Intelligence Report 2011: Sweden European IT Outsourcing Intelligence Report 2011: SwedenAbout IT Sourcing Europe IT Sourcing Europe is a UK company specialized in nearshore IT Outsourcing consultancy, market research and analysis. IT Sourcing Europe provides: • Top quality quantitative and qualitative ITO market research and fieldwork services • Evaluation of Central and Eastern Europes ITO services providers and their factual capabilities to deliver innovative technological solutions on time and on budget • Free consulting services for European companies planning to outsource IT / software development functions and / or change their current ITO strategy / engagement • Ad-Hoc ITO strategy development and full-cycle support Our Contacts: Address: The Meridian, 4 Copthall House, Station Square Coventry, West Midlands, CV1 2FL United Kingdom Email: info(at)itsourcing-europe.com Tel.: +44(0)2476992505 Web: www.itsourcing-europe.com Blog: http://itsourcingeurope.wordpress.com Follow our tweets @ITSourcingEurop Registration at the UK Companies House: 07217899 You are free to use, share and/or remix any part of this work as long as you attribute it to IT Sourcing Europe. 28 | C o p y r i g h t I T S o u r c i n g E u r o p e 2 0 1 1 | A l l R i g h t s R e s e r v e d

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